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U.S. Natural Gas Futures Rebound, Tracking Oil Rally on Middle East Tensions
U.S. natural gas futures recovered on Tuesday, rebounding from a multi-week low as a surge in crude oil prices provided upward momentum for the broader energy complex. The gains were tempered by persistent headwinds from record domestic production and expectations of softening demand.
Market Performance
Natural gas futures for September delivery on the New York Mercantile Exchange (NYMEX) rose 8.6 cents, or 3.2%, to settle at $2.78 per million British thermal units (MMBtu). The contract had fallen on Monday to its lowest level since August 7, 2023, according to a report from Investing.com.
Geopolitical Tensions Boost Crude
The primary driver for Tuesday's rally was the strength in the crude oil market, where Brent crude futures climbed above $91 per barrel. Oil prices were boosted by escalating concerns over energy supply disruptions amid heightened tensions in the Middle East.
AdFading prospects for a ceasefire agreement involving Iran contributed to market anxiety. According to official media reports cited by Investing.com, Iran's chief negotiator, Mohammad Baqer Qalibaf, stated that the crucial Strait of Hormuz would remain closed until the U.S. complies with the terms of a previous interim agreement.
Domestic Headwinds Limit Upside
Despite the support from oil markets, the upside for natural gas prices remains constrained by fundamental domestic factors. Record-high levels of U.S. natural gas production continue to weigh on the market, ensuring ample supply. At the same time, forecasts for weaker seasonal demand are also capping the potential for a more sustained rally.
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